The plight of the first time buyer has been well documented in recent times. While market conditions may not be perfect for the aspiring homeowner, new initiatives have been announced that should open doors for some.
Stamp Duty
To start with, the rise in the zero stamp duty threshold to £175,000 is good news, even though it’s only for 12 months. While the number of properties in that price band is limited, most areas outside London will have some homes on the market that will qualify, even if it means buyers scaling back their ambitions. This waiver on stamp duty comes to an end on 3 September 2009, so act soon if you want to take advantage.
HomeBuy Direct
The latest shared ownership scheme to be launched could be the answer for many first-time buyers. The government is now offering a 5-year interest free loan on up to 30% of the market value of a new build property. The household income cannot exceed £60,000 to qualify for the scheme and home buyers will need to ensure that they can obtain a mortgage for the remaining share.
Mortgage market
There may not be the wide range of mortgage products on the market compared to twelve months ago, but many lenders are reducing rates for popular fixed mortgages, which are ideal for people who need to know what their monthly repayments will be for the foreseeable future. A fixed rate for 5 years will suit many first time buyers, but make sure you’re aware of any extended tie-in, i.e. the period during which early repayment charges will apply, particularly on longer-term mortgages.
In addition to these latest developments, there are other solutions out there for prospective first-time buyers:
Guarantor Plan
While mortgages with a loan-to-value ratio of over 90% are considered hard to come by, many lenders will look more favourably on such a mortgage if a family member can guarantee at least part of the loan. If a would-be buyer has a relative who might be in a position to support a mortgage application in this way, it is well worth exploring that option.
Group mortgages
They do say ‘strength in numbers’ and when it comes to mortgages, it’s certainly true. The current climate may be tough for some sole applicants, but two, three or even four friends in the same situation could pool their resources and gain that all-important first step on the property ladder in the process.
A good place to start
To find out more about HomeBuy Direct and other shared ownership schemes, visit:
Teachers Building Society welcomes applications from teachers and education professionals on the HomeBuy Direct scheme, as well as other shared ownership initiatives. To find out how much you could borrow, use the online mortgage calculator at www.teachersbs.co.uk or call 0800 378 669.
